Options Trading News

January 31, 2013  Thu 12:45 AM CT

The CBOE Volatility Index and its futures jumped yesterday as major equity indexes declined.

The S&P 500 was down 5.88 points to close at 1501.96, just above the session lows reached at the end of the day. It did get as high as 1509.94 in the morning, a new five-year intraday high. Resistance is now 1510 and support is 1470.

The Nasdaq 100 was down 4.87 points to 2738.71. It too was just above the day's low, which came just before the bell. It was above 2757 shortly after the open but still well below its September highs. A first level of resistance will be seen at 2770, while support is at 2660.

The Russell 2000 was down 10.40 points, or 1.15 percent, to finish just above session lows at 896.81. The small-cap index posted a record high close on Tuesday and had been leading the market higher. Resistance is now 908, while the first level of support is 880 with 852 below that.

Despite the modest drop in the SPX, the VIX was up 1.01 points, or 7.6 percent, to finish at its session high of 14.32. That is the volatility index's highest close since the second trading day of 2013. It has been generally rising with the SPX, with a 10-day correlation that has turned positive--a rare occurrence, as the two indexes usually move inversely.

The action was not just some statistical quirk, as the futures were also sharply higher. The February futures gained 1.15 points, or 8.2 percent, to finish trading at 15.20. The March futures were up 0.80 points to close at 15.75.

This pushed the iPath S&P 500 VIX Short-Term Futures ETN (VXX) up 1.44 points, or 6.3 percent, to close at 24.30. That brings it back into the range from a week ago Friday as it climbs off last week's all-time lows.

More than 483,000 VIX options traded yesterday, with calls outpacing puts by 2 to 1. The VVIX Index, which measures the implied volatility of those options, was up 5 percent to 77.34. Even with that big move, however, it is still below any reading before 2013 in its short life.
Share this article with your friends

Related Stories


Video: Buying cheap calls in the VIX

October 12, 2015

As the spot volatility index drops below 17, Group One's Jamie Tyrrell says traders are buying 70,000 VIX November 30 calls for $0.50.


Video: Traders targeting higher VIX

October 9, 2015

The volatility index is little-changed today, but Group One's Jamie Tyrrell says some big trades are still looking for a higher VIX in October.


Video: VIX October 22 calls bought

October 8, 2015

The VIX Weeklies began trading today, but Group One's Jamie Tyrrell says the big trade is in standard options with a purchase of 45,000 VIX October 22 calls.


Videocast: VIX call buyers return

October 7, 2015

Group One's Jamie Tyrrell says traders were selling VIX calls early in the day but reversed course as the market rally fizzled.


Videocast: Volatility levels decline

October 6, 2015

Group One's Jamie Tyrrell says volatility trading today is implying that the type of VIX action from August and early September will not repeat itself.


Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

View more education articles »